Income Tax Appellate Tribunal - Bangalore
M/S Sangam Credit Co-Operative Society ... vs Income Tax Officer Ward-3(2)(1), ... on 1 June, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC-C" BENCH : BANGALORE
BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND
SHRI LALIET KUMAR, JUDICIAL MEMBER
ITA No. 1411/Bang/2018
Assessment Year :2014-15
M/s. Sangam Credit Co-
operative Society Ltd.,
No. 57, 2nd Cross, The Income Tax Officer,
Nagarbhavi Main Road, Vs. Ward - 3 (2) (1),
Anubhav Nagar, Bangalore.
Bangalore - 560 072.
PAN: AAKAS6987K
APPELLANT RESPONDENT
Appellant by : Shri C.V. Mudrabettu, Advocate
Respondent by : Shri D.K. Jha, Addl. CIT (DR)
Date of hearing : 22.05.2018
Date of Pronouncement : 01.06.2018
ORDER
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee which is directed against the order of ld. CIT (A)-3, Bangalore dated 05.03.2018 for Assessment Year 2014-15.
2. The grounds raised by the assessee are as under.
"1. The order passed by the authorities below to the extent which is against to the appellant is bad in law and contrary to the settled principles of law.
2. The appellant denies itself liable to be taxed on a total income of Rs. 10,10,277/- as assessed by the learned assessing officer as against the return income of Rs. NIL under the facts and circumstances of the case of the appellant.
3. The CIT(A) and AO has erred in disallowing the claim of deduction of an amount of Rs.10,10,271/- u/s.80P(2)(a)(i) of the Act on the fact and circumstances of the case.
4. The CIT(A) erred in holding that the Appellant has invested surplus funds with Co-Operative Banks and earned interest on it is not business income consequently it is income from other sources on the facts and circumstances of the case.ITA No. 1411/Bang/2018 Page 2 of 4
5. The CIT(A) failed to appreciate that, the Appellant is entitle to claim deduction u/s. 57 of the Act when the interest income is treated as income from other sources us/.56 of the Act on the facts and circumstances of the case. Reliance is placed on Karnataka High Court in ITA No,100004/2018.
6. The CIT(A) failed to appreciate that all Co-Operative Banks are Co-Operative Societies first and then they are converted to Co- operative Banks under the facts and circumstances of the case.
7. The CIT(A) failed to appreciate that the Co-Operative societies are legally bound to invest in Co-operative Banks under Section 58 of the Karnataka Co-Operative Society Act, under the facts and circumstances of the case.
8. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
9. In view of the above and the other grounds that may be urged at the time of hearing of the appeal, your Appellant prays that the appeal may be allowed in the interest of equity and justice."
3. It was submitted by ld. AR of assessee that the ld. CIT(A) has considered the judgment of Hon'ble apex Court rendered in the case of Citizen Co operative Society ltd. vs. ACIT as reported in 397 ITR 1. In this regard, he drawn our attention to Para 4.5 of the order of CIT (A). Then he submitted that in Para 4.6 of his order, Learned CIT (a) held that in view of this judgment, the assessee is not eligible for deduction u/s 80P (2) (a) (i) of I. T. Act without comparing the facts of the present case with the facts of that case. He submitted that in the facts of the present case, this judgment is not applicable in the present case and the matter may be restored to CIT (A) to decide this aspect of the matter afresh by passing a speaking and reasoned order in which he should compare the facts of the present case with the facts of that case. Thereafter, he submitted that in Paras 4.7 to 4.9 of his order, learned CIT (a) has held by following the judgment of Hon'ble Karnataka High Court dated 16.06.2017 rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society as reported in395 ITR 611 (Karn) that the assessee is not eligible for deduction u/s 80P of I. T. Act for this reason also. He submitted that the facts of this case are different and therefore, this judgment is not applicable in the present case. He submitted that in the present case, another judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO as reported in 230 Taxman 309 is applicable and therefore, the matter should be restored back to CIT (A) for a ITA No. 1411/Bang/2018 Page 3 of 4 fresh decision by following this judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra). At this juncture, the bench wanted to know regarding the facts of the present case because the decision of Hon'ble Karnataka High Court rendered in both these cases i.e. PCIT and Another Vs. Totagars Co-operative Sale Society (supra) and Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra) are on the same line but the conclusion is different because the facts are different. The bench pointed out that in the case of PCIT and Another Vs. Totagars Co-operative Sale Society(supra), the money deposited in bank was out of liability of the assessee and in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO(supra), the money deposited in bank was not out of liability but out of assessee's own funds and therefore, this decision is in favour of the assessee. The bench pointed out that if the facts in the present case are similar to that of the facts in the case of PCIT and Another Vs. Totagars Co-operative Sale Society (supra) then the issue should be decided against the assessee but if the facts of the present assessee are similar to that of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO(supra) then the issue is to be decided in favour of the assessee. In reply, it was submitted by ld. AR of assessee that the facts are not readily available and therefore, the matter may be restored back to the file of CIT(A) for fresh decision after examining the facts of the present case in the light of these two judgments of Hon'ble Karnataka High Court. The ld. DR of revenue also agreed to this proposition put forward by the ld. AR of assessee.
4. We have considered the rival submissions and we feel it proper that the matter should go back to the file of CIT(A) for fresh decision after examining the facts of the present case first in the light of the judgment of Hon'ble apex Court rendered in the case of Citizen Co operative Society ltd. vs. ACIT (Supra) and if it is found that the assessee is eligible for deduction u/s 80P even after considering this judgment of Hon'ble apex court, than the facts of the present case should be examined in the light of these two judgments rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society(supra) and Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO(supra) and if it is ITA No. 1411/Bang/2018 Page 4 of 4 found that the facts of the present case are in line with the facts of the PCIT and Another Vs. Totagars Co-operative Sale Society(supra) then the issue may be decided against the assessee and if the facts of the present case are in line with the facts of the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO(supra) then the issue may be decided in favour of the assessee. The CIT(A) should pass a speaking and reasoned order as per law in the light of above discussion after providing adequate opportunity of being heard to both sides.
5. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/-
(LALIET KUMAR) (ARUN KUMAR GARODIA)
Judicial Member Accountant Member
Bangalore,
Dated, the 01st June, 2018.
/MS/
Copy to:
1. Appellant 4. CIT(A)
2. Respondent 5. DR, ITAT, Bangalore
3. CIT 6. Guard file
By order
Senior Private Secretary,
Income Tax Appellate Tribunal,
Bangalore.